Workers' compensation insurance limits

Unlike general liability insurance, which covers third-party bodily injuries and property damage, workers' compensation insurance covers costs related to employee workplace injuries and illnesses.

This policy also helps protect business owners and sole proprietors from financial loss if they're injured on the job and are unable to work since personal healthcare insurance usually won't cover this.

Workers' compensation statutory requirements often vary by state, however, small businesses usually need this policy the moment they hire their first employee (or a specific number of employees).

Additionally, in most instances, a workers' compensation insurance policy includes employer's liability insurance. This coverage protects your business when an employee sues over a work injury or illness.

The limits on workers' comp insurance are broken down into two pieces:

1. Employee benefits, sometimes called Coverage A or Part A
2. Employer's liability, often called Coverage B or Part B

Employer's liability coverage likely won't be included in your workers' comp policy if you operate in a monopolistic state and purchase from a state fund. You can still add it as a stop gap policy from a private insurer.

It's best to consult with a licensed insurance agent to ensure you're getting the right insurance for your business and location.

As stated above, a workers' comp policy limit is broken down into two parts: employee benefits and employer's liability. Let's take a closer look at these two key elements.

Part A, or employee benefits, provides coverage for employee medical expenses and rehabilitation expenses, as well as disability benefits, as a result of a work-related injury or illness that leaves them unable to work. In some cases, it can pay out death benefits to your employee's family members and dependents.

Generally, there are no limits or exclusions to this coverage. Insurance providers will typically pay the full claim to cover any necessary treatments and medical bills for an employee's injury, occupational disease, and rehab.

However, it's up to each state's discretion on the amount of time and financial limit of disability benefits paid out to employees who are unable to work.

Part B, or the employer's liability portion of the policy, protects your business should an injured employee decide to sue you for a work-related illness or injury. If an employee claims they were injured due to negligent practices, they may sue your business for damages.

Should this happen, this part of your policy would cover your legal defenses, as well as any judgments or settlements.

Unlike employee benefits, employer's liability does have limits of liability or what your carrier will pay out. This limit is usually decided upon when purchasing your policy.

It's also important to note that Part B only addresses lawsuits related to a workers' compensation claim, and only applies if said claim is covered under your workman's compensation policy.

Workers' comp limits will generally depend on if it's an employee benefit or employer's liability claim:

Employee benefits (Part A), are, in essence, unlimited, based on your insurance company's approval of the reasonable and necessary medical treatment and rehabilitation for your injured worker. In part, your policy limit for employee benefits is at the discretion of your insurance provider and your state's governing body.

Employer's liability (Part B), conversely, has firm limitations to the policy. In most cases, the minimum limits for employer's liability coverage are typically:

• $100,000 per accident
• $500,000 per policy
• $100,000 per employee

Your employer's liability policy limits can be increased to higher limits for a small bump in cost on your workers' comp insurance premium.

For example, some general contractors may require their subcontractors to maintain a minimum limit on their policy that could be higher than the standard policy.

A workers' comp ghost policy covers legal requirements for one-person businesses (such as independent contractors and single-person limited liability companies) that need to carry workers' comp for statutory insurance requirements or to sign a contract, but it doesn't provide any coverage.

It's less expensive than a traditional workers' compensation policy, but does not offer any financial assistance in the event of a work accident or injury. Unsurprisingly, a ghost policy does not have any limits or minimum coverage because it is not an actual policy in the traditional sense, only in the technical sense.

Employer’s liability insurance, typically included in a worker's comp policy, offers financial protection against employee lawsuits and settlements for work-related injuries and illnesses.

Meanwhile, employment practices liability insurance (EPLI) covers lawsuits and settlements related to your employment practices, such as a violation of an employee’s rights or a hostile work environment.

EPLI is not included in your workers’ compensation insurance coverage and is usually purchased by business owners and directors. This policy safeguards your business against employee claims of wrongful termination, discrimination, sexual harassment, and other qualifying offenses.

Insureon helps a wide range of businesses get the coverage they need from top-rated U.S. insurance carriers. Complete our easy online application to get free insurance quotes.

Our expert insurance agents can help you choose the best, most affordable workers' compensation coverage that meets the needs of your small business.

You’ll typically be able to get coverage quickly and receive a copy of your workers' compensation insurance certificate on the same day.